Adding a Bathroom

[Clay White]

Hey y'all. First investment property under remodel. The home is a 3/1 with 1300 sq ft. The bathroom is large (250sq ft), and we originally had the idea to BRRRR it without touching the bathroom. However, during the remodel, we were given the idea to split the bathroom in 1/2 which would still have the main bath, but also create a master bath as well. The PM suggested we could get another $100-$150 on rent, and were quoted just over 6k for the work. If adding the second bath will add the 6k+ to the appraisal on the refi it would be a no brainer, but can't say with certainty. Does anyone have thoughts/experience on which choice they would take?

[Brad S.]

That's a no-brainer. YES, SPLIT THE BATHROOM for $6k!

What you describe is what we call functional obsolescence. Basically, the house has a decreased usefulness due to having only 1 bathroom and 3 bedrooms. So, if you have 3 occupants, they will be competing for the bathroom or the trees/bushes outside. But, most people prefer interior plumbing these days.

The lack of a second bathroom typically significantly reduces the appeal for both renters and potential buyers, and typically would result in less rent or value. I couldn't tell you for certainty if it would increase rent or value, because I don't know what the local comps are, etc. Your PM and Realtor is best for that. 

You will also most likely rent it quicker or sell it quicker, when the time comes.

Your house also has what is termed superadequacy with your oversized bathroom. That's a type of over-improvement and that bathroom sounds like it is over-sized for that house, as compared to similar sized houses. In my experience, a very nice large bathroom is not as appealing as 2 good size bathrooms. You can get 2 pretty good sized bathrooms with 250sf. I would also make sure you have enough storage space, maybe think about incorporating a linen closet, walk-in closet, storage closet, into that reconfiguring of the bathroom. Those are nice bonuses and you may be able to do that without sacrificing anything.

Also, keep in mind to have at least one bathtub, since young families will use it for bathing their lil ones. Typically, if you can only put one tub, it goes in the guest bath, not the master bath. Also, it is nice to have a private ensuite bathroom, connected to a master, if you can configure that. That's another nice selling point which makes your house stand out from others that don't have that feature. That feature has helped sell a couple of my houses in the past.

And it sounds like your house's issues are what we consider "curable," generally meaning easily and reasonably resolved.

SO, YES, DO 2 BATHROOMS!